Fewer Australian women are preparing to retire than men with 54% of men preparing, compared to 32% of women, according to international research. This gap of 22% is larger than the gap of 7% in the UK and 15% in the US.
The Retirement Readiness1 paper, prepared by the Actuaries Institute Australia, the American Academy of Actuaries and the UK’s Institute and Faculty of Actuaries, also found that 58% of those surveyed expect to live a 'poor' or 'modest' life in retirement.
"The shifting of risks to retirees in recent decades combined with the particularly harsh shocks associated with the financial crisis of 2008 appears to have transformed the retirement challenges for respondents in all three countries," the report said.
Only half the number of Australians surveyed think they will be able to rely only on the government as a source of income in retirement, compared with 70% in the UK and 66% in the US.
The financial pressure that comes from understanding that employer-provided benefits and contributions, savings and home equity will be necessary to make up any shortfall has forced many Australians to think they might never be able to retire.
"Many are likely feeling financial pressure to continue working and do not foresee a time when they will be secure enough to retire," the report said.
Need for savings
In Australia, personal savings shows the largest gender gap with Australian women lagging behind men by 11 percentage points, compared with a 3 percentage point gap in the UK and 6 in the US.
There is "clear evidence that without personal savings, reliance on government and employer-provided benefits would leave many people short of the financial means necessary to achieve financial security in a comfortable retirement", the report said.
More than a quarter of all 18-34 year olds questioned believe they will still need to work when they are in their 70s.
This figure dropped to 17% among people aged between 35 and 54, but jumped to 31% for people aged over 55.
"This may suggest that pessimism among the young about retiring in their 60s gives way to middle-aged optimism before yielding to realism among the oldest cohort," the report said.
"Without careful retirement planning and preparation, most people are unlikely to be able to sustain themselves during the entirety of their retirement in a lifestyle that they will find satisfactory."
Need to take action
The data indicated a large number of the people surveyed had failed to prepare to retire.
In Australia, only 55% of those questioned said they had done something to gather information and the same number said they had started saving for retirement.
Only 30% of the Australians surveyed claimed to know how much they might need for a 'comfortable' retirement and the report showed only 32% would be prepared for an unexpected early retirement.
The trend that emerged from the survey results was that diminished expectations about retirement prospects had made people less likely to put effort or resources into planning and saving for a future they expected to be bleak.
"Failing to prepare for retirement makes a more modest retirement more likely," the report said.
The report said that it was not surprising, but it was "concerning" that only a relatively small number of young people were preparing for retirement.
"That 40% or more of those 55 and older are not preparing is surprising and disturbing," it said.
1. Retirement Readiness, prepared by the Actuaries Institute Australia, the American Academy of Actuaries and the United Kingdom’s Institute and Faculty of Actuaries. Retrieved from https://www.actuaries.asn.au/Library/MediaRelease/2017/InternationalRetirementReadiness121017.pdf